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Why VMware Paid $1.26B for 70 Software Engineers

• Cade Metz via

One of the reasons Google and VMware have been so successful over the past decade, says Eric Brewer, is that both companies managed to snatch some of the world’s brightest engineers from the big-name research labs that petered out in the late 1990s.

Over the previous 30 years, labs run by tech giants such as AT&T, Xerox, and DEC had led the computing revolution, but at the turn of the millennium, much of their lifeblood was pumped into a pair of companies that were only just getting off the ground.

“At the time of the bubble burst in 2001, when everyone was downsizing, including DEC, the main two high-tech companies that were hiring were Google and VMware,” says Brewer, the University of California at Berkeley computer science professor who’s now part of an effort to redesign the technology that underpins the Google empire. “Because of the crazy lopsidedness of that supply and demand, both companies hired many truly great people and both have done well in part because of that.”

Google and VMWare may seem like very different companies. One does web search. The other does virtual servers. But they’re more alike than you might think. Google’s search engine was successful in large part because the company built data-center technologies that could support such a massive application, and VMware is a company that reinvented the data center for the rest of the business world. In each case, they couldn’t have done so without the top engineers on the planet.

‘Having the services of those 100 engineers turned out to be incredibly valuable. They did something that really transformed the industry and they gave rise to an asset that’s worth plus-or-minus $40 billion.’
— Paul Maritz

Ten years on, as it seeks to reinvent computing all over again and maintain its place inside the world’s data centers, VMware has snatched up another collection of world-class engineers. But this time, the virtual computing kingpin took a different tack. It bought them for $1.26 billion.


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